Wherever your clients’ businesses are registered, they have a requirement to file reports with their secretary of state to verify information about their company. Even though the reports themselves are not very complicated, the toughest part for your clients tends to be remembering to file them on time. And when your clients’ miss their deadlines, they (unfortunately) acquire penalties and unnecessary fees. Let’s take a look at some of the factors that contribute to your clients missing deadlines, the risks and costs that they incur as a result, and how you can help your clients never miss a deadline again.
Factors That Contribute to Missing Deadlines
Depending on the individual state requirements, filing deadlines are spread throughout the year. Most state’s reports are due annually, but others only require them bi-annually. Your clients’ deadlines can also vary based on their entity type and if they are a domestic or foreign (out-of-state) entity.
Additionally, some states deadlines are always on a standard calendar date, while others base the deadline on the company’s original registration date. Another thing to keep in mind is if your clients are registered to conduct business in multiple states, they often need to file annual reports in each one. Whew! That’s sure a lot of factors to remember and keep track of – it’s no wonder deadlines can get missed.
Only a few states typically send your clients’ notices about their upcoming annual report due dates. Furthermore, these notices ought not to be relied on as their sole reminder because physical mail can get lost or emails can get sent to SPAM. Plus, without additional reminders, your clients could forget about their filing deadlines. Your clients can also get inundated with junk letters (from fraudulent organizations) that are intentionally designed to look like “official” letters from their state. These organizations prey on your unsuspecting clients, so make sure that you prepare them to be aware.
Costs and Risks When Your Clients Miss Their Deadlines
When states do not receive your clients’ annual state reports by their due date, most states will apply penalties and late fees – and these costs are typically non-negotiable. For example, the Delaware Annual Report late fee is $125 (for corporations), and the California Statement of Information late fee is $250 (for corporations). Plus, some states also tack on interest for each month your client is delinquent.
In addition to late fees, when they don’t file on time, your clients risk the chance that their company might lose its Good Standing Status and not be able to acquire a Certificate of Good Standing (or an equivalent) from their state. A Certificate of Good Standing states that your client’s organization has fulfilled all of their legal requirements and is approved to conduct business within their state. If your client’s company becomes delinquent, they could lose their authority to do business and have to file an expensive reinstatement to return to active status.
How FileJet Can Help
Wouldn’t it be great if you were able to provide your clients with a tool so they would never inadvertently miss a deadline again? It would be even better if this tool automatically sent out reminders to your clients for you – making one less thing to think about too! The great news is that this tool does exist within the FileJet platform.
FileJet is an entity formation and maintenance software program that enables legal and accounting professionals to gather, process, file, and maintain entity information. FileJet makes staying within compliance easy by automatically sending out reminders to your clients about their report deadlines. Plus, it automatically knows what needs to be filed in each state, when each report is due, and your clients can submit their reports with a simple click of a button.
Ensuring that your clients maintain compliance with their annual state filing deadlines not only eliminates wasted money and time, but it also allows them to concentrate their efforts on more productive activities. If you would like more information on FileJet, have questions, or are interested in scheduling a demo, please contact us today.